You may never have met her, but Baroness Hogg is one of the grand fromages with a degree of control over the FDs of companies complying with the new corporate governance code.
Hogg became chairman of the Financial Reporting Council (FRC) in May, bringing to bear more than two decades among London’s top business figureheads, from serving her time as governor of the BBC, chairing private equity group 3i and serving on the boards of P&O and Banco Santander, punctuated by a stint in John Major’s policy unit.
She isn’t an accountant or a former FD, but Hogg (who, Financial Director feels obliged to mention, is married to the infamous 'moat cleaner' MP Douglas Hogg) is rolling out the new code to an audience of regulation-weary finance heads.
The new code is proving unpopular, not least because it forces adhering companies to put their boards and chairmen up for re-election each year, says Mario Christodoulou, chief reporter for our sister paper Accountancy Age, who interviewed her recently. He found Hogg unrepentant on its 'comply or explain' system – or as critics call it, 'comply or else'.
“If people don’t want to do it, and their shareholders agree, well that’s the beauty of our system,” Hogg told him. “The code is not handed down from on high out of the clouds. It is an articulation based on consultation on what people believe to be best practice.”
Hogg hinted that she felt for FDs having to implementing standards – but that they are here to stay.
“The whole development of a corporate governance code has been challenging,” she said. “There’s always been resistance to the setting of standards in this area, which I perfectly understand. I remember the first roundtable I went to, to discuss the issue of board evaluations. A number of chairmen around the table were totally dismissive of the idea that boards needed to evaluate themselves. Now it’s a given.”
And she warned that shareholder rights will be more important from now on.
“Some of the language we get coming out of Europe worries me a bit,” she said. “There is a strain of argument that says, ‘shareholders, if you don’t use your rights effectively we, government, are going to apply more legislation and rules’.”
Read the whole interview at www.financialdirector.co.uk/2270252
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